The US has led innovations in many sectors over the past several decades. However, when it comes to marijuana legalization, the country is behind its peers. Nonetheless, the US is slowly moving towards legalized marijuana. Just last year, the passage of the Farm Bill, which included the legalization of hemp, hinted at the possibility of the US warming up to marijuana legalization at the federal level. Last week, we saw yet another positive move for the legalized marijuana industry with the introduction of the Secure and Fair Enforcement Banking Act of 2019.
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SAFE Banking Act of 2019
The purpose of the SAFE Banking Act of 2019 is to protect financial institutions that serve legal cannabis-related businesses. The act essentially means that cannabis-related businesses can use financial institutions to conduct their day-to-day businesses just like any other business. Currently, because cannabis is still considered an illegal drug at the federal level, financial institutions would shy away from providing services to those businesses. As a result, most of the transactions are conducted in cash.
Despite all these hassles, cannabis-related businesses are required to pay taxes, which is also done largely in cash, creating significant logistical issues for companies including Canopy Growth (WEED), Aurora Cannabis (ACB), Tilray (TLRY), Aphria (APHA), and others that intend to operate on a large scale. Thus, the act could certainly be a relief for industry players (HMMJ).